As a local expert in Teller County, Jarrod Newcom of Skyridge Lending brings invaluable insight into the region’s unique market trends and interest rate shifts. With his deep understanding of local lending options, Jarrod helps clients navigate the current market, offering tailored advice on how to make the most of interest rate opportunities in today’s dynamic environment. His expertise is a trusted resource for residents looking to maximize their investments and find innovative financing solutions that align with their financial goals.
“Well, mortgage rates went higher after the Fed rate cut in mid-September. Not what we expected, right? Well, that’s because mortgage rates are directly tied to the bond market and the Fed is changing the short term bank rates. The Fed does influence mortgage rates just not directly and the bond market is already baking in the Feds decision weeks before their actual announcement based on comments and reports leading up to the big reveal. Then to top it off, then to top it off, mortgage rates spiked even higher a couple weeks ago based on the high stakes jobs report that came out. We had no way of knowing how the future would play out then, and that continues to be the case, but it's time to get the next big warning on the table. Keep reading for how to navigate all this volatility if you are needing to refinance or buy a new home.
The past 5 months have seen some decent examples of volatility in financial markets, including mortgage rates. But the past few weeks have done a lousy job of preparing us for what could be a staggeringly volatile November. If you were tuned into the interest rate and market movements in 2020-2022 during COVID, you've already seen some real volatility. While potential isn't always realized, it's important to understand that the first 6 days of November 2025 could bring big changes to the mortgage rate market. This isn't too hard to believe given all that can change after a presidential election, but the same 6 day window will also play host to another jobs report that's just as important as the last one which caused mortgage rates to skyrocket. That data comes out the day after the election. The following Wednesday brings the next Fed rate announcement, which has at least some chance to result in "no rate cut" after a double-sized cut (0.50 vs 0.25) at the last meeting. This is actually the least important ingredient in November's volatility cocktail largely because the rate market will try to adjust for the Fed decision ahead of time (just like I said above) based on how the jobs report comes out the day after the election. Depending on who wins the election and the jobs report, be ready for a big move in either direction, good or bad.
Now for navigating all this volatility ehile still needing to buy or refinance. If you’re in the market to buy a home and you are very rate conscious (not a risk taker), it may be a good idea to find that home and lock in an interest rate before the election and the jobs report. If you’re a risk taker, then wait and see what transpires in early November before locking in an interest rate on a new home purchase or a refinance. My motto has always been “date the rate, marry the home”. You can always refinance in the future if rates come down and you missed the boat on lower rates right now. Almost no one stays in the same home and/or mortgage loan longer than 5 years.
If you are buying a home or refinancing a home you know you are likely to hang on to for at least 3 years, I would highly encourage a “permanent rate buydown”. A buydown is just paying more upfront at the closing of a loan for a lower rate over the life of the loan. If you’re buying a home, you can negotiate with the seller of a property to provide you funds specifically for this purpose. You always want to try and reduce the amount of interest you pay but you also don’t want to overpay for that lower rate. To figure out if you’re overpaying, you can have a mortgage loan officer like myself calculate the “recoup period”. That is part of what we in the industry call a “net tangible benefit”. Once you know the recoup, you can decide if it makes sense based on how long you plan on remaining in the home or more importantly how long you plan to stay in the mortgage before refinancing. If you’re convinced rates are going to continue to decline, you don’t want a long recoup period since you’ll likely do another refinance. Another option is a temporary rate buydown. Basically, it has the same idea of paying up front for a lower rate, however, the lower rate is temporary, not permanent. This can ONLY be done on a purchase transaction where the seller specifically gives money to you in the contract for the temporary rate buydown. You still have to qualify for the loan based on the final rate but for the first year or two your payments are made based on lower rates. This is a good strategy when you know you’ll either sell the home in the next couple years or you are firmly convinced rates will continue to drop and you can refinance into a lower permanent rate before your payments go back to the qualifying/final rate. You can also combine the permanent and temporary rate buydown strategies to maximize your interest savings.
Another option is getting into an adjustable rate mortgage (ARM). There are lots of different types of ARMs out there. They can adjust monthly, bi-annually, or annually and have variable fixed terms before the rate starts adjusting. You have to be careful on the “floor and ceiling” rates. The floor rate is the lowest the rate can adjust down to and the ceiling if the highest a rate is allowed to adjust up to. The interest rate Is based on a margin the lender offers coupled with an index (i.e. CMT, SOFR, LIBOR, etc.) which is the variable piece of the equation. You can permanently buy down a margin just like you can the rate on a fixed term mortgage.
The best idea regardless, is to contact a mortgage professional like myself to know all your options and let me help you make an informed decision based on your particular situation. Cheers!”
Buying or Selling? Ask Andrea Cashdollar!
I take my customer service very seriously and will respond within 24 hours. Your satisfaction is my number one priority and I look forward to being able to help you in any way that I can. Ask me anything below or feel free to reach out to me via email or phone. Talk soon!
Comments